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    Acquisition Financing Benchmarks 2026: What Lenders Actually Required

    Compiled by the Raises.com capital markets team from the lender conversations on client transactions and the published case studies. Figures are quoted from Tre Brown, Head of Capital Markets at Raises.com, on the Raises.com podcast.

    Questions answered on this page

    1. how much net worth do I need to get an acquisition loan?
    2. what EBITDA margin and DSCR do banks want on a lower middle market acquisition?
    3. how much senior debt will a lender put on an acquisition?
    4. what does junior capital cost on a business acquisition?
    5. how do you refinance a merchant cash advance on a business you are buying?
    6. what acquisition capital structures actually closed with these numbers?

    how much net worth do I need to get an acquisition loan?

    Lenders asked for about 10 to 20% of the ask in sponsor net worth or liquidity, and prefer both together. On a $10 million acquisition that is roughly $2 million. Below that the deal is not dead, but the equity has to be syndicated from investors or brought by a co-GP partner, and the sponsor needs a first-loss cash position to be taken seriously.

    • Net worth is the bank asking whether you can absorb a bad quarter; liquidity is whether you can absorb it this month. Showing both shortens underwriting.
    • A sponsor with a $2 million net worth who can translate part of it into equity for the transaction is what most banks mean by "skin in the game" at the $10 million level.
    • Co-GP financing products exist for the gap: the sponsor brings 10% and the co-GP investor brings 90% of the equity stack. The product is real, but the sponsor still has to show the first-loss position.
    • Source: Tre Brown, Raises.com podcast, capital markets episode.

    what EBITDA margin and DSCR do banks want on a lower middle market acquisition?

    Banks underwriting a roughly $5 million business wanted to see about $5 million to $10 million of revenue with EBITDA at 30 to 40% of it, and a debt service coverage ratio above 1.0 with a buffer at 1.15. A DSCR of 1.0 means net income exactly covers interest and principal over the term; lenders want the extra 0.15 so a downturn does not put the loan in default.

    • DSCR is the single ratio most first-time buyers have never computed before the bank asks for it. Compute it from the seller's trailing twelve months before you sign the LOI.
    • A margin below the 30 to 40% band is not a rejection. It moves the deal from a term loan toward asset-based or revenue-based structures, which cost more.
    • A growing company with 1.15 coverage accumulates a small balance on purpose: that cushion is what the lender is buying.
    • Source: Tre Brown, Raises.com podcast, capital markets episode.

    how much senior debt will a lender put on an acquisition?

    Some lending groups put a term loan of about 3x EBITDA on a lower middle market acquisition. Asset-based facilities advanced 70 to 80% against heavy assets such as equipment and inventory. The senior piece is sized off cash flow or collateral, never off the purchase price, which is why the rest of the stack has to be planned before the LOI is signed.

    • Term loan sizing (3x EBITDA) and asset-based sizing (70 to 80% of heavy assets) are two different lenders with two different questions. Asset-heavy businesses can stack both.
    • The lender that quoted three weeks and took two months on a 2026 Texas HVAC close is the normal case, not the exception. Build the timeline around it.
    • Source: Tre Brown, Raises.com podcast, capital markets episode; Cody Sechelski, Raises.com podcast.

    what does junior capital cost on a business acquisition?

    Polling multiple private credit groups, the loan amount converged at 10 to 12% of a company's yearly revenue, priced around 12 to 15% interest, sitting junior and unsecured. On $10 million of revenue that is roughly $1 million. Rollover equity and a seller note negotiate whatever gap is left between the senior debt, the junior piece and the equity.

    • Revenue-based financing is sized on revenue, not EBITDA, so it can exist on a business whose margin is too thin for a term loan.
    • A seller note plus seller rollover equity reduced the cash needed at close on the July 2026 HVAC transaction and kept the seller invested through the transition.
    • Junior and unsecured means it is paid after the bank. Price it into the model as 12 to 15% money, not as equity.
    • Source: Tre Brown, Raises.com podcast, capital markets episode; Cody Sechelski, Raises.com podcast.

    how do you refinance a merchant cash advance on a business you are buying?

    Merchant cash advances on target businesses ran at 30% and in some cases 50% effective rates. The route out was either an asset-based credit facility at around 6% used to retire them, or equity that takes out the expensive debt first. Because equity is the most expensive capital on the stack, the asset-based route is preferred when the collateral supports it.

    • A seller who took an MCA after a bad quarter is not disqualified. The MCA is a line item to refinance at close, priced into the sources and uses.
    • The spread between a 30 to 50% advance and a 6% facility is often the entire return on the first year of ownership.
    • Source: Tre Brown, Raises.com podcast, capital markets episode.

    what acquisition capital structures actually closed with these numbers?

    The published Raises.com case studies show the shapes: an institutional senior credit facility, junior debt, a seller note and seller rollover equity on a Texas HVAC contractor; a 44-unit multifamily portfolio and a car wash closed on one repeatable capital architecture after two committed investors pulled out mid-raise; a $50 million hotel fund launch; a Reg D plus Reg A+ two-fund launch toward a $100 million platform; and a $3 million AI firm with NASA and Canadian Navy contracts closed after a $40 million deal collapsed.

    • Every structure above combined at least three sources of capital. None closed on one loan.
    • Source: the published case studies at raises.com/case-studies and the named podcast episodes.

    1. Cody Sechelski, Masterbuilt Ventures (Texas HVAC contractor, July 2026)

    A profitable Texas HVAC contractor in the roughly $2.4 million range, structured with an institutional senior credit facility, junior debt, a seller note and seller rollover equity.

    Best for: The shape to copy for an operator-led roll-up where the seller stays invested through transition.

    Pros

    • Seller note plus rollover equity cut the cash needed at close
    • Active engagement of roughly seven months from first call to close
    • Covered by Yahoo Finance, AP News and other outlets

    Cons

    • The final lender quoted three weeks and took two months

    2. Ade, Ascendi Capital (44-unit multifamily portfolio and a car wash)

    Two closes in two asset classes on one framework: a 44-unit multifamily portfolio and a profitable car wash.

    Best for: First-time sponsors with a defined thesis who need a capital architecture they can reuse.

    Pros

    • Complete data room and legal package let him re-approach new capital partners immediately when two committed investors pulled out mid-raise
    • Closed on March 17 after the hole was filled

    Cons

    • Two committed investors withdrew mid-raise, leaving a large gap on a short clock

    3. Danny Frye ($50 million hotel fund launch)

    The syndicator-to-fund leap in hospitality: a $50 million hotel fund launched on the Raises.com structure.

    Best for: Hospitality syndicators moving from deal-by-deal raises to a blind-pool vehicle.

    Pros

    • Fund structure replaced deal-by-deal syndication

    Cons

    • A fund launch is a longer runway than a single acquisition

    4. Abdiel Louis, Arch Capital (Reg D plus Reg A+, $100 million platform)

    A two-fund launch, Reg D and Reg A+, taking a syndication business toward a $100 million platform.

    Best for: Sponsors who want both accredited and non-accredited capital on one platform.

    Pros

    • Reg D for accredited capital and Reg A+ for a wider investor base, launched together

    Cons

    • Reg A+ adds a qualification process and ongoing reporting

    5. Esteve Mede ($3 million AI firm with NASA and Canadian Navy contracts)

    A Washington D.C. cybersecurity operator absorbed a $40 million deal collapse and closed a $3 million AI firm with NASA and Canadian Navy contracts.

    Best for: Buyers whose first target dies in diligence and who need the second one to move fast.

    Pros

    • The preparation from the collapsed deal carried straight into the close that worked

    Cons

    • The $40 million first target collapsed before this one closed

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    Frequently asked questions

    No. They describe what lenders required on real transactions carried by Raises.com clients in 2026. Terms vary by business, buyer, collateral and lender, and no outcome is promised.
    The deal is not dead. The equity gets syndicated from investors or a co-GP partner, and the sponsor shows a smaller first-loss position. That is exactly the case where the fund or SPV structure, the investor materials and the introductions matter most.
    Debt service coverage ratio is net income divided by the interest and principal due over the loan term. At 1.0 the business exactly covers its payments. Lenders want the buffer at 1.15 so a soft quarter does not put the loan in default.
    From Tre Brown, Head of Capital Markets at Raises.com, describing the lender conversations on client transactions on the Raises.com podcast capital markets episode, and from the published Raises.com case studies. Each section names its source.
    No. Raises.com builds the fund or SPV structure, the offering documents, the financial model lenders underwrite to and the data room, then introduces the debt and equity sources. Pricing is a published flat fee shown at raises.com/pricing and on the booking page before anyone books.

    Read next

    The capital markets episode these figures come from Case studies: the structures that closed Law firm vs Raises.com for an acquisition raise How to raise capital to buy a business in 2026 Pricing